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Friday, December 05, 2008
Free Agents and Salary Arbitration

Some of you have not seen a post from me on the Sports Law Blog for awhile. However, salary arbitration season is now in full swing. Earlier this week (Monday midnight ET deadline), 24 free agents were offered salary arbitration by their teams. The split between leagues was identical with 12 in each league.

One of the primary reasons that teams offer arbitration is to make sure that if their free agent moves to another team the team that loses that player receives draft picks as compensation. The Elias Sports Bureau ranks free agents in three categories - A, B, or unranked. If a team loses a Type-A free agent, the team losing a player receives two compensatory draft picks: If the signing teams first-round pick is below the top fifteen picks in the draft, the signing team loses that pick to the free agent’s former team plus a supplemental or sandwich pick between the first and second rounds. If the signing team has a choice in the first fifteen, the free agent’s former team receives the signing team’s second-round choice plus the sandwich pick. The compensation for losing a Type-B free agent is a supplemental selection. However, if a team offers arbitration, and the player accepts by the deadline this Sunday, both team and player are locked into the upcoming season with the only issue remaining the compensation for the year. Most teams prefer not to do this because the compensation almost always increases over the prior year with arbitration.

The list of players offered arbitration is as follows:

American League

Milton Bradley (Texas Rangers), A.J. Burnett (Toronto Blue Jays), Paul Byrd (Boston Red Sox), Orlando Cabrera (Chicago White Sox), Jon Garland (Los Angeles Angels of Anaheim), Mark Grudzielanek (Kansas City Royals), Raul Ibanez (Seattle Mariners), Darren Oliver (Los Angeles Angels of Anaheim), Dennys Reyes (Minnesota Twins), Francisco Rodriguez (Los Angeles Angels of Anaheim), Mark Teixeira (Los Angeles Angels of Anaheim), Jason Varitek (Boston Red Sox)

National League

Casey Blake (Los Angeles Dodgers), Juan Cruz (Arizona Diamondbacks), Brian Fuentes (Colorado Rockies), Orlando Hudson (Arizona Diamondbacks), Derek Lowe (Los Angeles Dodgers), Brandon Lyon (Arizona Diamondbacks), Oliver Perez (New York Mets), Manny Ramirez (Los Angeles Dodgers), CC Sabathia (Milwaukee Brewers), Ben Sheets (Milwaukee Brewers), Brian Shouse (Milwaukee Brewers), David Weathers (Cincinnati Reds).

There were fifteeen Type-A free agents offered arbitration and nine Type-B players offered arbitration. The lists are as follows:

Type-A - 15 (Burnett, Cabrera, Cruz, Fuentes, Hudson, Ibanez, Lowe, Oliver, Perez, Ramirez, Rodriguez, Sabathia, Sheets, Teixeira, Varitek)

Type-B - 9 (Blake, Bradley, Byrd, Garland, Grudzielanek, Lyon, Reyes, Shouse, Weathers

By my count, 56 American League free agents and 67 National League free agents were not offered arbitration.

I will offer a review next week of this first round of arbitration. Usually this is not the focal point of arbitration. That focus usually involves players that are not yet eligible to become free agents because they lack six years of qualified service. The dates of importance for those players and their teams are January 5-15, 2009 (salary arbitration filing period), January 19, 2009 (exchange of salary arbitration figures), February 1-21, 2009 (salary arbitration hearings).



Glad to see you're posting your research on the blog again this year. Thanks.

How do you see the current economic recession affecting arbitration this year, if at all? I ask this because, in arbitration, the arbitrators are not permitted to take that into consideration, whereas obviously economic conditions can impact the free agent market. I wonder what impact that will have on a player's decision whether to accept arbitration.

Blogger Rick Karcher -- 12/06/2008 12:20 PM  

You are correct that the current economic recession is apparently going to impact the free agent market this year. As to the group this weekend, I was not surprised to see only David Weathers and Darren Oliver accept arbitration. For the most part, the teams offered arbitration to make sure that they received draft choices often for players that they expected would decline arbitration. Most of the players offered want to see what the free agent market will bear for their services. For many mid-level free agents, they might have done better by staying with their existing team and allowing the arbitration process to decide their salary.

Although the arbitrators are not supposed to take into consideration “the financial position of the Player or the Club,” the comparable salaries under consideration this year could be altered. I have always had a hard time trying to figure out about the impact of comparable salaries negotiated during the time just before the hearings for the upcoming year. One of the individuals actually involved in arbitrations for a team responding to one of my post last year by saying that the only individuals that you look at are other members of the same class in terms of years of service, e.g. three-year players compared to other three-year players, four-years players compared to other four-year players. The criteria in the CBA points out the use of comparable players from the “one annual service group above the Player’s annual service group.” The CBA also discusses the use of any player’s salaries for comparison if the player’s representatives can successfully show “special accomplishment.” However, an article that I mentioned last year that discussed the comparable players offered by the Yankees during the Chien-Ming Wang arbitration hearing included some individuals who were already six-year plus players (Roy Oswalt, Freddy Garcia, and John Lackey).

As to the usual class of players in the Super-Two to six-year players, it will be interesting to see if the economy changes negotiation strategy up through the exchange of figures or after that period to before the hearing when many teams and players will try to find an acceptable figure. It could also change the strategy of what figure you did decide to present to the other side.

Blogger Ed Edmonds -- 12/08/2008 4:15 PM  


I was trying to find out exactly what salary arbitration was...thanks for clearing that up for me. However, I have a question...the Yanks signed 3 class A players, all for different teams. Who gets the 1st round pick from the yanks since they can't all have one?

Anonymous Anonymous -- 1/15/2009 1:04 PM  

This is an important topic. Salary and stuff like that really needs to be discussed in more depth. I would do it now but I'd rather just read on. You understand?

Anonymous Sports Authority Salaries -- 4/20/2009 7:28 PM  

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